The African Export-Import Bank (Afreximbank) has welcomed the launch of the Africa Credit Rating Agency (AfCRA), describing the agency as an important addition to Africa’s financial architecture and credit market.

Senior Executive Vice President of Afreximbank, Denys Denya said credit ratings play an important role in determining access to capital, shaping investors’ perceptions and influencing the cost at which governments, institutions and businesses finance development.

Denya said assessments of African credit risk should be independent, rigorous and evidence-based, while taking into account the economic realities, institutions and structures of the markets being assessed.

According to him, the establishment of AfCRA provides an additional African-led source of credit opinion for investors and issuers across the continent.

He pointed out that the agency’s success should not be measured by whether it gives more favourable ratings, but by the credibility of its analysis, quality of its data, transparency of its methodology and its ability to improve understanding of African sovereign, sub-sovereign and corporate credit.

He stated that the development was particularly important because many African issuers remain unrated, while local-currency and sub-sovereign markets still have limited rating coverage.

Denya also noted that expanding credible rating coverage could improve the information available to investors and support the development of deeper domestic and regional capital markets.

Commenting on the need for AfCRA to develop a methodology that reflects the realities of African markets, Denya said the agency should develop its own standards rather than simply follow standards established elsewhere.

“The rating methodology AfCRA develops must recognise the uniqueness of our environment and its institutional structures. The Agency must set its own standards and not follow those set elsewhere, it must build a unique identity that conforms to an ‘African best practice,’” he said.

Denya also underscored the importance of the agency maintaining its independence and African ownership as it takes off.

“Most importantly, AfCRA must set a new benchmark for the continent, maintain its independence, and remain wholly owned and controlled by Africans,” he said.

He noted that African markets should use the agency while expecting it to provide a complete assessment of the continent’s position, including strengths that may have been overlooked by the market and weaknesses that still need to be addressed.

He said AfCRA should not be viewed as a replacement for existing international and regional rating agencies, but as a complementary source of credit analysis.

According to him, the agency could broaden the range of credible analysis available to investors and issuers, while strengthening competition, transparency and analytical capacity within Africa’s credit markets.

He stated that this would become increasingly important as African countries seek to mobilise the capital required to finance industrialisation, trade, infrastructure and broader economic transformation.

He also noted that credible African institutions that improve the quality of information available to markets, strengthen investor confidence and deepen financial markets would play an increasingly important role in the continent’s development.